Management lessons from Sony’s gender pay gap

From a business perspective, one of the weightier bits of intel to come from the Sony hack has been the revelation of a huge pay gap between two top execs. According to documents posted by Fusion, Hannah Minghella, president of production for Columbia Pictures, is on target to earn $1.55 million this year. Her co-president, Michael De Luca, will take home $2.4 million.

News outlets were quick to decry the gender wage gap. “A Female Sony Executive Makes Nearly $1 Million Less Than Her Male Counterpart,” blasted Business Insider. Fusion noted that of the 17 Sony employees with base pay rates over $1 million, only one is a woman.

But De Luca, 49, came to his role at Sony Pictures with a bevy of awards and 25 years of experience in the industry, including stints as president of production at New Line and at DreamWorks. Minghella, 35, had her first production credit on The Talented Mr. Ripley in 1999. She spent three years as head of Sony Pictures Animation on her way to her current position. (This year, she made our 40 Under 40 list.)

So, did De Luca’s greater experience and track record warrant higher pay? Are his responsibilities more substantive? It is impossible to know what decision-making went on in this particular case. (Sony did not respond to requests for comment.)

This particular pay gap, however, raises an important management question: are there times when a pay disparity between a man and woman with the same title is reasonable?

Experts in workplace compensation note that employers aren’t required to pay two people the same salary simply because they hold the same title. In fact, the Equal Pay Act of 1963 gives employers wide berth. The federal law states that employers can set different pay for people with identical jobs if the reason is based on a person’s seniority, merit, quality or quantity of work, or some other factor not related to their sex.

Still, Roberta Liebenberg, former chair of the American Bar Association’s Commission on Women, cautions that employers need to be watchful of the overall pattern. If a gap between a man and woman isn’t an isolated instance, she says, there could be “inherent unconscious biases” at work.

The problem with unconscious bias is that it is often invisible to managers; they may rationalize inequities and fail to consider that their biases– unchallenged assumptions– may be influencing how they set employee pay. Unconscious bias is common in the legal field, Liebenberg says. In fact, female equity partners at law firms make 60 to 80 percent less than their male counterparts, an ABA study shows. The average gap is 68 percent, but the largest noted was 89 percent.

“If there’s a discrepancy between a woman and a man, it may be fine,” says Michele Mayes, general counsel at the New York Public Library and current chair of the ABA’s Commission on Women. “But there needs to be rigor around it. There needs to be an entire set of questions and checks to make sure it’s actually correct.” Too many employers, she says, quickly justify pay differences without fully investigating the situation or comparing the work of the two employees.

Hollywood gets particularly knocked for its problems, and indeed, there is only one female CEO of a Fortune 1000 entertainment company, Amy Miles of Regal. (See also: Women CEOs in the Fortune 1000, by the numbers.) But the gender pay gap is pervasive across industries, and all levels of organizations, says Anna Beninger, director of research at Catalyst, a nonprofit focused on issues facing female professionals.

In 2007, Catalyst began tracking 10,000 MBA grads from top business schools and found that women start out earning an average $4,600 less than men at their very first job. The gap keeps growing over time, and after only two to three years, Catalyst has found, it surpasses $40,000. “It’s a common myth that these gaps are only at senior levels, but in fact it begins on day one,” says Beninger. “Women don’t start out on equal footing.”

Mayes suggests that employers need to more closely scrutinize those pay gaps, and ask themselves key questions. How does a person’s higher salary fit in with the existing pay structure? Are two people performing the same work, but getting paid differently? (Beninger notes, “How [people] got to their role no longer matters. What matters is their current job.”)

And finally, if one person is being paid less than a colleague with a similar job, how would you explain that salary disparity if it is discovered? “You can’t just hope the person won’t find out,” Mayes says. “In the age of the Internet and social media, [uncovering that info] is child’s play. And you are begging for trouble.”

From her own experience in hiring lawyers, Mayes says she has had to walk away from candidates who sought higher pay than existing employees in similar positions. “I can’t give it to them and then look the other person [who makes less] in the eye the next day,” she says. “Because even if they don’t know, I do.”

At the very least, the leaked pay scales at Sony Pictures have helped shine a light on a problem that goes well beyond Hollywood. “I’m glad this got leaked,” says Shelly Ulaj, founder of the nonprofit Women Empowered, which connects women professionals in the California area. “There has been a lot of movement towards gender equality in pay, in titles, but ultimately, we as women are still way behind men.”

Does New York really need a Women’s Equality Party?

There isn’t a political party in the U.S. that’s all about women’s rights. Former New York City Council Speaker Christine Quinn thinks we need to change that.

Quinn is working with New York Governor Andrew Cuomo and lieutenant governor candidate Kathy Hochul to make the Women’s Equality Party an official political party recognized by the state of New York. To do so, they need 50,000 votes on Tuesday for Democratic candidates running under the WEP line – Gov. Cuomo is standing in as a figurehead – so that the party can be permanently included on future ballots. The party’s first order of business would be to get the Women’s Equality Act passed, which, among other things, would guarantee equal pay for women across the state.

In an interview with Fortune, Quinn explained why she thinks New York must create an entirely new party in order to get pro-women legislation passed.

Edited excerpts:

Why does New York need a Women’s Equality Party?

If you ask most New Yorkers, even most female New Yorkers, they would think there is a state law that codifies Roe vs. Wade. They would think that we had statewide protections against discrimination if you’re pregnant. They would think we had required pay equity in New York. But that’s not true. The efforts to get these things into law have failed in Albany. We need more political muscle, more tools and a bigger team pushing on behalf of the needs of women. I am under no illusion that legislation is a silver bullet. I know it’s not, but I know it’s a first and critical step to bring full equality for women and girls.

What are some reasons that you decided to become the spokesperson for the party?

My goddaughter just started as a freshman at NYU. I don’t want her to work her tuchas off at NYU and then graduate in a city where her work isn’t as recognized as the young men in her class. We have the ability to take a big step forward in that arena by passing the Women’s Equality Act. She deserves that because no one is working harder than she is.

Why doesn’t any other state have a party like this?

No other state is as good as New York. (Laughs) No, I don’t know. Sometimes in politics you work with what you have. That is not a bad thing. We often do that. But to step back and say we need to add something here, it is not always what you do first. It is a lot of effort and work and it could not work. That would be embarrassing. Our natural inclination is to keep using what we have.

You have received some criticism from The Working Families Party that Women’s Equality Act will take away some of their power. What is your take on that criticism?

It isn’t unfamiliar. When the Working Families Party was being formed in the late 1990s, I was a council member and I supported its formation. The Democratic leaders in my district were furious. “This going to weaken the Democratic party,” they would say. Change is hard. Addition of new people is hard. The same way that that criticism and concern is unfounded, I think this current concern is unfounded. This isn’t about instead of, it’s about in addition to. We need more to get this particular ball over the goal line. We are pulling together more.

How are you encouraging younger voters — particularly young women — to vote for this party?

If you are a young woman, you don’t want to think about the fact that you are working your tail off and maybe not getting paid as much as the young man sitting next to you. Or maybe you are today, but in the long run you won’t be. Who wants to think about that when it’s midnight and you are at work? No one wants to think about that, but it’s the truth and you have to think about it. Hopefully having this conversation will get young women to talk about it in a way that is energizing.

A majority of the candidates running on the Women’s Equality Party line are men. Why is that?

The Republicans spent a lot of money in court, and had many of our women candidates dropped off the line. It started with a more gender diverse set of candidates, but the Republicans put an end to that. We also need more women to run for office. That is a fact and hopefully the party will be helpful with that. Any parties breakdown of candidates is not going to be as gender diverse as we would like it to be.

You need 50,000 votes on Tuesday to pass. Are you going to do it?

The first step was the requirement of getting 50,000 petition signatures and we got 100,000. That speaks volumes about the need and excitement of this party. I do think we are going to do it, but it is hard to know for sure. I have never been a part of this kind of effort and this level before. I am very optimistic.

Why the U.S. is losing the global fight for gender equality

The gap in economic opportunity between American men and women is narrowing, but the U.S. still can’t seem to get ahead in the global race for equality.

The United States came in at No. 20 out of 142 countries in this year’s ranking of gender equality by the World Economic Forum. It marks a comeback of sorts for the country after having slipped out of the top 20 for the past two years.

The Global Gender Gap Index, released Monday night, measures gender-based disparities in individual countries over time. The organization ranks countries based on the progress they’ve made to close the gender gap in four categories: economic participation and opportunity, educational attainment, health and survival and political empowerment.

The highest possible score on the index is 1 and means that a country has fully eradicated the gender gap in every measured category. No country has actually done so since the index was first published in 2006.

Iceland, which has had a female head of state in 20 of the past 50 years, ranked No. 1 on WEF’s index with a score of .859. The country was closely followed by its Nordic neighbors: Finland, Norway, Sweden and Denmark. The U.S. finished with a score of .746, putting it behind countries like Canada, South Africa and France, but ahead of other developed countries like the United Kingdom and Australia.

A surprising finding is that the U.S. ranks lower than some countries with considerably less economic development. Rwanda and Nicaragua both have less than $9 billion in GDP, but both rank among the top 10 countries in the world when it comes to gender equality. The index measures gender disparities in access to resources and opportunities, regardless of overall resource availability and level of economic development.

“Both rich countries and poor countries can afford gender equality,” World Economic Forum Senior Director Saadia Zahidi said in an interview with Fortune. “Gender equality doesn’t have to only come along once a country is fully developed.”

Among the four equality categories WEF uses to rank countries, the U.S. ranked lowest in health and survival. While women outlive men by an average of about six years in OECD countries, American women outlive their male counterparts by just about three years, which hurt its ranking, said Zahidi.

The U.S. was also penalized by the shortage of women in political power, ending up ranked No. 54 in the political category largely because it has never had a female president. At a cabinet level, the U.S. has seen a slight increase with women holding 32% of positions compared with 27% last year. In Sweden, a relative utopia for female political leaders, women make up 57% of all ministers.

America is making the most progress closing the gender gap in terms of economic participation and opportunity. Ranked No. 4 on WEF’s list behind Burundi, Norway and Malawi, the U.S. has closed nearly 83% of the gender gap in the workplace since WEF first conducted the study in 2006. For the first time, the U.S. exceeded gender parity for professional and technical workers, 55% of whom are now women. Yet it still has work to do on wage equality for similar work: In the sub-category of wage equality, the U.S. received the low score of .66.

At this rate, the global gender gap in the workplace is not expected to close until 2095. Efforts to narrow the gap are moving at a glacial pace because a lot of the benefits are just coming to light now, Zahidi said. More companies globally are acknowledging that businesses that include more women at the top tend to outperform those who don’t. Also, more women are graduating from college than men while buying power among women is growing as well. As public figures like Melinda Gates and Hillary Clinton take on investing in women and girls and closing the gender gap as public platform, Zahidi added the rate of change should increase.

“The notion that gender equality is not only the right thing to do, but the smart thing is a fairly new mindset that did not exist in the public consciousness even five years ago,” she said. “In the short-term, this kind of change is hard because it is millions and millions of individual changes that need to come together on a global level.”

Cashing in on power: Fortune’s Most Powerful Women ranked by pay

Among this year’s list of the 50 Most Powerful Women in Business, 29 work for a Fortune 500 company, and—thanks to public filings with the SEC—have given the rest of us a peek at their most recent annual compensation. On the grid below we’ve charted their pay against their company’s stock performance. Note to Sheryl—you may not want to push that “equal pay” thing too hard. (click to enlarge infographic)

Graphic: Analee Kasudia (Fortune)Methodology: Total compensation for each executive includes the following for the most recent fiscal year: salary and bonuses; other compensation, such as vested restricted stock grants, LTIP payouts, and perks; and stock gains, the value realized by exercising stock options, investor returns are for each company’s respective fiscal year.

Jill Abramson and ‘The Confidence Code': A case study

FORTUNE — Katty Kay and Claire Shipman should be proud of Jill Abramson. The authors of The Confidence Code, Kay and Shipman recently put out a call to action for women to advocate for themselves and their value in the workplace. If we take yesterday’s New Yorker article as fact, the former executive editor of the New York Times did just that when she asked for more pay after discovering her male predecessor earned more.

Yet Abramson was reportedly not applauded for her effort to stand up for herself and the value she brought to the Times. Instead, top executives at the paper perceived her request for more money as “pushy,” and sources say it was contributing factor to her getting edged out of the executive role. So while Kay and Shipman indicate in their book on the “science and art and self-assurance” that women’s fears of being reprimanded for asserting themselves are unfounded, Abramson’s alleged story highlights a different result.

The New York TimesNYT did not respond immediately to Fortune’s request for comment.

Women are four times less likely to initiate salary negotiations than men, studies have shown. When women do negotiate, they typically ask for 30% less money than men do. The fear of asking for more is one of the often-cited reasons for the gender wage gap that continues to exist — even between women and men who work in the same occupation. But what if the workplace isn’t ready for a bunch of confidence wielding women standing up for themselves and their value? As was the case with Abramson, what’s the point of confidence if the system she worked within didn’t support it?

Confidence aside, strong-willed women cannot succeed in the workplace without the support of an accepting culture. A young female staffer at the Times told Amanda Hess of Slate that “we don’t have a great culture of female solidarity at the Times,” while another said “there’s still very much an Old Boys’ Club atmosphere here.” Both anecdotes indicate that an insupportable culture may be partly responsible for Abramson’s controversial downfall.

Ken Favaro, a senior partner at consulting firm Strategy& and the author of a recent study on gender imbalance in the C-Suite, also pointed to a “cultural drag” between the growing percentage of women in the workplace and the stagnating percentage reaching the executive level.

“A lot of these companies were started at least 50 years ago when there were no women in the workforce, much less running companies,” Favaro said. “It takes a long time for work culture to change.”

New America Foundation CEO Anne-Marie Slaughter made a similar point in 2013 when she explained in the Atlantic why she believes women still can’t have it all. “I see much less of an ambition gap and much more of a workplace and society that isn’t allowing us to use the talent that is multiplied well beyond this room,” Slaughter told Fortune at last year’s Most Powerful Women Summit. In Slaughter’s view, the expectations of women in power must change before the gender gap has any hope of becoming more narrow.

Indeed, the verdict is still out on why exactly the first female executive editor of the New York Times is suddenly fleeing the post. But as Rebecca Traister of the New Republic points out, whatever the real story is, it’s likely not a pretty one. After two and half years leading the Times through arguably the most disruptive time in history for journalism, Abramson will not remain at the paper or assist in former managing editor Dean Baquet’s transition to the executive role. Whether or not gender played into her dismissal, reporting to date suggests a workplace culture at the Times that could learn to be more accepting of vocal leaders like Abramson.

UPDATE: Times Company chairman Arthur Sulzbeger Jr. issued a memo Thursday stating that “It is simply not true that Jill’s compensation was significantly less than her predecessors” and “comparisons between the pensions of different executive editors are difficult.”

Study: Young women less likely to aspire to C-suite

General Motors’ GM decision to name Mary Barra its next chief executive has been hailed as a breakthrough for women. The daughter of a die maker who spent 33 years at the U.S. automaker, Barra is setting a milestone in an industry long dominated by men.

Her rise to the top is indeed inspiring, and hopefully it will be one of many examples that help change attitudes about women and careers. Even though today’s young women are the first in modern history to start their careers making nearly as much as men, they have a pretty dim view of their prospects.

Young women are less likely than their male counterparts to aspire to a job in the C-suite, according to a study released Wednesday by Pew Research Center: 34% of women 18 to 32 years old said they aren’t interested in becoming a boss or top manager, while only 24% of young men said the same.

The gender gap on this question widens among working adults in their 30s and 40s, when many women grapple with work and motherhood. Fifty-eight percent of men and 41% of women ages 33 to 48 said they aspired to someday be a boss or a top manager, according to Pew’s survey of 2,002 adults, which included 810 millennials ages 18 to 32. Among adults ages 49 to 67, 32% of men and 21% of women said they would like to have one of the top jobs.

Women have made gains in education and in the labor force in recent decades, but the survey suggests women still feel it’s a man’s world.

How Gen-Y women can close the pay gap

A friend recently told me about a male colleague; he joined her company one month after she arrived. “He’s asking for a $10,000 dollar raise tomorrow at our performance review,” she griped. “I can’t believe he’s doing that. I just can’t imagine asking for a raise after only being here for seven months.”

Today is Equal Pay Day, which marks how far into 2013 a woman must work to earn the same pay that her male counterpart earned in 2012. Much of the discussion about pay inequity is focused on policy and institutional discrimination, which is important — but I’m interested in what factors we as individuals might be able to do about it. After hearing countless stories, like my friend’s, from women in the Levo League community, a network for ambitious Gen-Y women, I realize: You don’t get what you deserve; you get what you ask for.

Women make around 90 percent of what their male counterparts make when they first join the workforce, but the gap grows dramatically as they age. I knew my male friends were four times more likely to negotiate their starting salaries than I was, but I still didn’t ask for more when I began as an analyst at McKinsey after graduation.

I’m not the only one who isn’t asking. When we surveyed the Levo League community, we found that approximately 75% did not negotiate starting salaries at their current roles. The result of not asking isn’t pretty: Women lose out on half a million dollars by the time they are 60.

Why Gen Y Women Aren’t Asking for More

There are countless excuses from women who didn’t ask for more money: “Honestly, I felt so fortunate to be given a job after my internship and after sending countless resumes, I thought it was a fair enough starting salary.” Or: “Instead of thinking a company is lucky to have me, I’m thinking I’m lucky to be at this company.”

I rarely hear such responses from my male friends. “I ask for a raise every three months without fail,” one told me. “The company should know how much more value I bring and that I expect to be compensated for it.”

Why do women keep themselves from asking for a raise? One reason is a need for permission. Another is a fear of going against societal norms. The study “Do Women Avoid Salary Negotiations?” found that when a job description says “salary negotiable,” women are more likely to negotiate their salary because they think it is expected that they should.

Sheryl Sandberg’s book Lean In highlights the societal perceptions that hurt women’s careers. As women rise through the ranks and become more powerful, they’re less liked — while their male friends become better liked. Being bossy doesn’t always equate with female success. Yet, the harsh reality is that if women want to reach equal pay, they can’t let the fear of social stigma stop them from asking for a raise.

Interestingly, women are actually better negotiators than men — if they’re negotiating on behalf of others. “Women outperform men in representational negotiations by 14 to 23 percent,” said Margaret Neale of the Stanford Graduate School of Business in her Lean In lecture on negotiation. Another study shows that when women expect to do well in a negotiation, they easily out-negotiate their male counterparts.

(Negotiation) practice makes perfect

Linda Babcock, author of Why Women Don’t Ask, says strong negotiation often begins with a line that explains how the conversation demonstrates your skills. For example: “I don’t know how typical it is for people at my level to negotiate, but I’m hopeful you’ll see my skill at negotiating as something important that I bring to the job.”

Gen Y women can successfully negotiate. Of the women in the Levo League community who are negotiating their starting salary, about half are getting more money. Those who didn’t get a raise did not have their job offers rescinded (another common fear).

One woman who asked and got rejected didn’t let it get her down. “I asked,” she said. “I exercised the negotiation muscle. I’m still alive. It was liberating. And the next time won’t be as hard.”

To get to pay equity, Gen-Y women need to get comfortable being uncomfortable, and ask for more.